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Dynamic stochastic analysis of the farm subsidy-efficiency link: evidence from France

Jean Joseph Minviel and Timo Sipiläinen ()
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Jean Joseph Minviel: SMART, INRA
Timo Sipiläinen: University of Helsinki, Department of Economics and Management

Journal of Productivity Analysis, 2018, vol. 50, issue 1, 41-54

Abstract: Abstract The existing literature on the subsidy-efficiency nexus is almost exclusively based on static modelling and thus ignores the inter-temporal nature of production decisions. The present paper contributes to this literature by developing a dynamic stochastic frontier model, which is then estimated using a sample of French farms over the period 1992–2011. For comparison purposes, the static counterpart of the dynamic model is also estimated. The results indicate that, in the dynamic case as well as in the static one, public subsidies are negatively associated with farm technical efficiency. Nevertheless, these linkages are found to be weak, and they are much weaker when dynamic aspects are taken into account.

Keywords: Dynamic efficiency; Hyperbolic distance function; Subsidies; Farms (search for similar items in EconPapers)
JEL-codes: D92 Q12 Q18 C54 D24 (search for similar items in EconPapers)
Date: 2018
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